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Thanos Papasavvas, head of currency management at Investec Asset Management is bearish on the U.S. dollar, CNBC reports. He is speculating that the Federal Reserve will change its language to indicate downside risks to the U.S. economy.
He points up the contrast between the eurozone and U.S. economies. European leaders have taken measures to cut their deficits and spending. The U.S., on the other hand, is still spending to stimulate our economy. Papasavvas told CNBC that the "Dollar weakness will be the story of the next few months."
Eurozone and UK growth is rising. The euro has bounced back to the $1.30 to $1.35 range. Just a few weeks ago we heard dire predictions of the eurozone collapsing. That did not happen.
Another currency strategist, Johathan Loynesm, chief European economist at Capital Economics told CNBC: "Activity indicators suggest that the eurozone is performing surprisingly well, albeit with a marked divergence between the core and the periphery." He added, however, that export growth is slowing and unemployment is still rising.
From his recent comments and the Fed's minutes of its latest meeting, it feels like Fed Chairman Bernanke is headed toward more easing. That being the case, selling the U.S. dollar is perhaps a good bet.
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